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AUD/USD Forex Technical Analysis – Early Downside Bias Targets .6731, Followed by .6722

James Hyerczyk

The Australian Dollar is trading lower against the U.S. Dollar early Monday as investors continue to digest Friday’s solid U.S. Non-Farm Payrolls report. The financial markets are also closed in Australia and China, which is creating a low-volume environment.

The U.S. Dollar is also edging higher after Friday’s jobs data dampened the chances of a Fed rate cut at the end of the month. Furthermore, demand for the Aussie Dollar softened early in the session after a Bloomberg report over the week-end said that Chinese officials are signaling they are increasingly reluctant to agree to a broad deal pursued by U.S. President Donald Trump.

Essentially, the Aussie is being pressured by increasing doubts the October 10-11 trade talks between the United States and China will lead to a trade deal.

At 06:28 GMT, the AUD/USD is trading .6750, down 0.0016 or -0.23%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at .6671 on October 2.

The AUD/USD is in no position to change the main trend to up, but a move through .6671 will signal a resumption of the downtrend.

The minor trend is also down. A trade through .6775 will change the minor trend to up. This move will reaffirm the shift in momentum.

The minor range is .6671 to .6774. Its 50% level or pivot at .6722 is potential support.

The short-term range is .6895 to .6671. Its retracement zone at .6783 to .6890 is potential resistance.

Daily Technical Forecast

Based on the current price at .6750 and the inside move, the direction of the AUD/USD is a toss-up.

Bearish Scenario

If sellers take control then look for a move into the uptrending Gann angle at .6731, followed by a potential support cluster at .6725 to .6722.

Crossing to the weak side of .6722 will indicate the selling is getting stronger. This could trigger a further rally into the next uptrending Gann angle at .6701.

Bullish Scenario

If buyers come in strong then look for a rally into the high at .6774 and the minor top at .6775, followed closely by the short-term 50% level at .6783. Since the trend is down, sellers are likely to come in on a test of these levels.

Taking out .6783 will indicate the buying is getting stronger. A sustained move over this level is likely to lead to a test of the resistance cluster at .6809 to .6810.

This article was originally posted on FX Empire